Customer Motivation And Buying
Behaviours On The Internet In Ghana
A Survey From University Of Education Winneba And Christian University
College Of Kumasi
Paul Arthur
Stanislaus Deh
Master program Business Administration
Luleå University of Technology
1 | P a g e THESIS
CUSTOMER MOTIVATION AND BUYING BEHAVIOURS ON THE INTERNET IN GHANA: A SURVEY FROM UNIVERSITY OF ED UCATION WINNEBA AND CHRISTIAN
UNIVERSITY COLLEGE OF KUMASI.
By
Paul Arthur (Lulea 08/05) Stanislaus Deh (Lulea 08/011)
Submitted to
Dr Melani Prinsloo
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ACKNOWLEDGMENT
Customer motivation and buying behaviours on the Internet in Ghana is the area of this Master Thesis. This study was done in 2010 at Lulea University of Technology (LTU) under their outreach program in the University of Education (UEW) - Kumasi campus in Ghana.
For this study we collected theories surfing the Internet and using library books and also collected data by on- line means. We also contacted various people and friends and were supervised by Dr Melani Prinsloo, PhD of LTU. On the way of our journey, we have gained extensive experience.
It was impossible to complete the studies without the kind help and sincere supervision of Dr Melani Prinsloo, PhD of LTU. The vast information stored on the web and its incredibility and magic helped us to reach and gather information.
Finally, we would like to mention the LTU's endeavor to commence this new program through their outreach program in the University of Education (UEW) - Kumasi campus in Ghana. This offered us the opportunity to do our research in the field of e-commerce as if we were on the campus of LTU in Sweden. We cannot conclude without mentioning the experienced professors who risked their lives and traveled distances from all over the world to make this pro gram a success.
We both here like to take this opportunity of thanking all above- mentioned people.
3 | P a g e ABSTRACT
The Internet has developed into a new distribution channel and on- line transactions that is rapidly increasing. This has created a need to understand customer motivation and buying behaviours on the Internet.
The purpose of this dissertation is to understand if there are any particular factors that influence the behaviour of the on- line consumer in Ghana. Primary data was collected through a survey that was conducted at the campuses of the University of Education Winneba and Christian University College of Kumasi.
The major findings of the study found the main factors that motivate people to use the Internet on campus were; convenience, simple to use and hassle free. Price and trust were also identified as important factors.
It was realized that, companies who want to provide o n- line services must first identify the means to increase the overall interactivity of their websites before they move towards e-commerce adoption. In the end recommendation for Small and Medium Enterprises (SMEs) and Internet service providers are discussed.
4 | P a g e Table of Contents
ACKNOWLEDGMENT... 2
ABSTRACT... 3
CHAPTER O NE–GENERAL PRO BLEM DISCUSSION ... 7
1.0INTRODUCTION... 7
1.1 BACKGROUND:GHANA ... 9
1.2 BACKGROUNDOFTHESTUDY ...10
1.3 PROBLEMSTATEMENT...14
1.4 PURPOSEOFTHESTUDY ...16
1.5 JUSTIFICATIONOFTHESTUDY ...16
1.6 RESEARCHOBJECTIVES ...16
1.6.1 Prima ry objectives...16
1.6.2 Secondary objectives...17
1.7 RESEARCHQUESTION ...17
1.8 DEFINITIONOFKEYCO NCEPT ...17
1.8.1 Custo mer ...17
1.8.2 Buying Behaviour ...18
1.8.3 Motiva tion...18
1.8.4 Intern et ...18
1.8.5 Electronic Commerce (E-Commerce) ...19
1.9 SUMMARYOFCHAPTERONE ...19
CHAPTER TWO- LITERATURE REVIEW ...20
2.0 INTRODUCTION ...20
2.1 LITERATUREREVIEW ...21
2 .1.1 The Internet Micro-Environment ...21
2.1.2 Models Of On-Line Buyer Behaviour...22
2.2 INTERNETMACRO-ENVIRONMENT...30
2.2.1 Social Fa ctors...30
2.2.2 Legal And Ethical Factors...32
2.2.3 Economic Facto rs ...39
2.2.4 Political ...40
2.2.5 Technological Fa ctors ...41
2.3 CULTUREANDTECHNOLOGYADOPTION ...52
2.4 ITADOPTION ...54
2.5 SELECTIONOFFACTORS ...56
2.6 SUMMARYOFCHAPTERTWO ...57
CHAPTER THREE- RESEARCH METHODOLOGY...58
3.0INTRODUCTION...58
3.1 RESEARCHPURPOSE ...58
3.1.1 Exploratory Resea rch ...59
3.1.2 Descriptive Research...59
3.1.3 Explanatory Research ...59
3.1.4 Application Of Research Purpose To This Resea rch Project ...59
3.2 RESEARCHAPPROACH ...59
3.2.1 Quantitative Approach ...60
3.2.2 Qualitative Approach ...60
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3.3 RESEARCHSTRATEGY...61
3.3.1 Survey...63
3.3.2 Application Of Research Strategy To This Resea rch Project ...63
3.4 DATACOLLECTIONMETHOD ...63
3.5 SURVEYTECHNIQUES ...64
3.5.1 Collecting Primary Data Using A Questionnaire ...67
3.6 QUESTIONNAIREDESIGN ...67 3.7 SAMPLESELECTION ...68 3.7.1 Convenience Sampling : ...69 3.8 DATAANALYSIS ...69 3.8.1 Validity ...70 3.8.2 Reliability ...70
3.9 SUMMARYOFCHAPTERTHREE...71
CHAPTER FO UR- DATA ANALYSIS AND PRESENTATION...72
4.0 INTRODUCTION...72
4.1 PRESENTATIONANDDATAANALYSIS ...72
4.1.1 Challenges to effective use of the Internet...85
4.1.2 Motivating factors for Internet usage on campus ...96
4.2 SUMMARYOFCHAPTERFOUR ...113
CHAPTER FIVE- SUMMARY OF FINDINGS ...114
5.0 INTRODUCTION ...114
5.1 SUMMARYOFFINDINGS ...115
5.2 CONCLUSIONSANDRECOMMENDATIONS ...117
5.3 AREASOFFURTHERRESEARCH ...117
REFERENCES...119
APPENDIX 1: QUESTIONNAIRE TO RESPONDENTS ...125
APPENDIX2: LIST OF TABLES ...129
4.1 TABLE 1:COUNTRY E-GOVERNMENT READINESS INDEX RANK ...13
4.2 TABLE 2:GHANA INTERNET USAGE AND POPULATION GROWTH ...15
4.3 TABLE 3:TYPES OF INFORMATION COLLECTED ON-LINE AND RELATED TECHNOLOGIES ...34
4.4 TABLE 4:SURVEY TECHNIQUES (DESCRIPTION) ...64
4.5 TABLE 5:SURVEY TECHNIQUES (ADVANTAGES) ...65
4.6 TABLE 6:SURVEY TECHNIQUES (DISADVANTAGES)...66
4.7 TABLE 7:CONVENIENCE SAMPLING EXPLAINED ...69
4.8 TABLE 8:CATEGORY OF RESPONDENTS INTERVIEWED ...76
APPENDIX 3: LIST OF FIGURES ...129
4.9 FIGURE 1:OUTLINE OF THESIS ... 7
4.10 FIGURE 2:CHAPTER DISPOSITION OF THE BACKGROUND OF THE STUDY ... 8
4.11 FIGURE 3:CHAPTER DISPOSITION OF THE LITERATURE REVIEW ...20
4.12 FIGURE 5:COMET PRODUCT COMPARISON FACILITIES ...27
4.13 FIGURE 6:DIFFUSION-ADOPTION CURVE ...43
4.14 FIGURE 7:GARTNER HYPE CYCLE ...44
4.15 FIGURE 8:PUBLIC-KEY (ASYMMETRIC ENCRYPTION) ...48
4.16 FIGURE 9:MOTIVATIONS FOR INTERNET USAGE AND ON-LINE BUYING BEHAVIOR ...55
4.17 FIGURE 10:RESEARCH PARADIGM PRESENTATIONS FOR METHODOLOGY ...58
4.18 FIGURE 11:RELEVANT SITUATIONS FOR DIFFERENT RESEARCH STRATEGIES ...62
4.19 FIGURE 12:CHAPTER DISPOSITION OF DATA ANALYSIS ...72
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4.22 FIGURE 15:ACADEMIC QUALIFICATIONS...75
4.23 FIGURE 16:INTERNET USAGE ON UNIVERSITY CAMPUS ...77
4.24 FIGURE 17:I HAVE ACCESS TO A COMPUTER ...78
4.25 FIGURE 18:NO INTERNET ACCESS ...79
4.26 FIGURE 19:I HAVE 24HOURS ACCESS TO THE INTERNET ...79
4.27 FIGURE 20:ACCESS TO INTERNET IS EXPENSIVE ON CAMPUS ...80
4.28 FIGURE 21:ACCESSIBILITY AS A CHALLENGE TO EFFECTIVE USE OF INTERNET ...81
4.29 FIGURE 22:CONNECTIVITY ...82
4.30 FIGURE 23:SYSTEM SUPPORT AS A CHALLENGE TO EFFECTIVE USE OF INTERNET ...83
4.31 FIGURE 24:TECHNOLOGY SKILLS AS A CHALLENGE TO EFFECTIVE USE OF INTERNET ...84
4.32 FIGURE 25:SECURITY AS A CHALLENGE TO EFFECTIVE USE OF INTERNET ...85
4.33 FIGURE 26:COST AS A CHALLENGE TO EFFECTIVE USE OF INTERNET ...87
4.34 FIGURE 27:JUST BROWSE FOR ANY INFORMATION THAT I COME ACROSS ...88
4.35 FIGURE 28:NORMALLY USE FOR SPECIFIC INFORMATION OR PRODUCT ...89
4.36 FIGURE 29:INTERNET USED TO SEEK ENTERTAINMENT ...90
4.37 FIGURE 30:INTERNET USAGE FOR RESEARCH PURPOSES ...91
4.38 FIGURE 31:INTERNET USE TO PURCHASE BOOKS AND OTHER ACCESSORIES ...92
4.39 FIGURE 32:INTERNET USAGE FOR SOCIAL NETWORKING ...93
4.40 FIGURE 33:INTERNET USAGE FOR INTERNET BANKING ...94
4.41 FIGURE 34:INTERNET USAGE FOR TICKETING AND RESERVATION ...95
4.42 FIGURE 35:INTERNET USAGE FOR ONLINE COURSES ...95
4.43 FIGURE 36:THE INTERNET IS CONVENIENT, SIMPLE TO USE AND HASSLE FREE...97
4.44 FIGURE 37:THE INTERNET OFFERS COMPETITIVE PRICES ...98
4.45 FIGURE 38:LACK OF PERSONAL CONTACT AND FACE ANONYMITY ...99
4.46 FIGURE 39:USERS NOT CONFIDENT OF SECURITY OF PERSONAL DETAILS ...100
4.47 FIGURE 40:ORDER PLACEMENT ON THE INTERNET 24 HOURS ...101
4.48 FIGURE 41:INTERNET IS INFORMATIVE ...102
4.49 FIGURE 42:INTERNET IS ENTERTAINING ...102
4.50 FIGURE 43:INTERNET BRINGS YOU CLOSER TO FRIENDS ALL THE TIME ...103
4.51 FIGURE 44: INTERNET IS FRUSTRATING ...104
4.52 FIGURE 45:INTERNET IS EXPENSIVE ...105
4.53 FIGURE 46:INTERNET IS TIME CONSUMING ...106
4.54 FIGURE 47:AS FAR AS INTERNET IS CONCERNED THE UNIVERSITY COMPARE TO OTHERS ...109
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CHAPTER ONE–GENERAL PROBLEM DISCUSSION
1.0 INTRODUCTION
This chapter commences with diagram depicting the flow of this thesis which is divided into five chapters. In the first chapter, the background of the selected research area is presented. It will also discuss the problem statement and the research questions. In chapter two, theories and studies related to the topic will be presented. It will also touch on the theoretical models of the research area. Chapter three will focus on the research methods, approach, strategy, data collection methods, validity and reliability of the research. In chapter four, research data presentation and analysis as well as the results will be discussed. Finally, chapter five will be devoted to summary of findings, conclusions and recommendations. It also discusses further research areas.
• General Problem Discussion
Chapter 1
• Literature Review
Chapter 2
• Methodology
Chapter 3
• Data presentation and analysis
Chapter 4
• Summary of findings, conclusions and
recommendations
Chapter 5
Figure 1: Outline of thesis8 | P a g e
Ghana as well as the background of the study. It will focus on the internet communication technology (ICT) background in Ghana in terms of policy and advancement made so far. It will help the reader to be introduced to the key concepts in the research study. The chapter also discusses customer motivation and on- line buying behaviours, the problem discussion, the purpose and specific research question.
Figure 2: Chapter disposition of the background of the study
Introduction
Background of Ghana
Background of the study
Problem Statement
Purpose of study
Justification of the study
Research objectives
Research question
Definition of Key concept
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1.1 BACKGROUND: GHANA
Ghana is located on the West African coast and is surrounded by the Ivory Coast to the west, Togo to the east, Burkina Faso to the north, and the Atlantic coastline to the south. In 1957 Ghana gained its independence from Britain and was the first African country south of the Sahara to be independent from colonial rule. Until the early 1960s, the economy flourished as a result of development in agricultural and mining sectors (Frimpong-Ansah, 1991). However, by the mid-1960s, the economy had literally collapsed. The World Bank and the International Monetary Fund (IMF) came to the rescue with structural adjustment programs. Presently, Ghana is a country in transition, characterized by economic restructuring with privatization at both macro-economic and micro-economic levels, a weak financial sector, and free market reforms (Kalyuzhnova and Taylor, 2001). A consequence of market reforms is the government's desire to promote information communication technology (ICT).
In 1995 Ghana became the first country in sub-Saharan Africa to have ―full Internet connectivity‖. In the West African sub-region, Ghana has the most developed Internet Technology (IT) sector (African Business Magazine, 2005). Out of 104 countries surveyed in the World Economic Forum's (WEF), Ghana improved its world ranking from 74th position in 2003/2004 to 64th in 2005 (Global Information Technology Report (GITR) for 2004-2005).
In a recent survey by the Networked Readiness Index that measures the degree of preparation of a nation or community to participate in and benefit from ICT developments, Ghana was one of the 23 African countries in the top 100. In Africa, Ghana ranked number 7 (International Telecommunications Union, 2004).
National policy shapes technological diffusion and particularly e-commerce diffusion (Gibbs et al., 2003). A key factor is the government's promotion of e-commerce and ICT more broadly. The government's ICT initiatives paved the way for private sector e-commerce initiatives and facilitated growth, given the significance of the SME sector to Ghana's developmental goals (Aryeetey and Fosu, 2006). With the above background, understanding the perceived strategic value (PSV) and adoption of e-commerce by SMEs is warranted.
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1.2 BACKGROUND OF THE STUDY
One of the most significant trends in the last ten years is the increased use of the Internet for
conducting business. The trend stems from the benefits that accrue to firms that use the medium. For instance, research shows that the adoption of e-commerce leads to a variety of benefits that include cost reduction, product quality improvement, new customer or supplier contacts and the creation of new ways of selling existing products (Schneider and Perry, 2000;Chaudhury and Kuilboer, 2002). Some would even argue that e-commerce is an important vehicle propelling the process of globalisation (Gibbs et al., 2003).
It is worth noting that benefits are being realized in developed countries such as Australia ( Berrill et al., 2004), as well as in developing countries such as Chile (Grandon and Pearson, 2003) and Malaysia (Mukti, 2000). The United Nations (2004) concludes that e-commerce has become a reality and is on a growth path in both developed and developing countries. Evidence of the growth of e-commerce includes the evolution of the number www servers in the world, as well as the use of secure la yer protocol, which supports secure transactions (United Nations, 2004). A recent survey found that as of June 2004, there were almost 52 million websites globally, representing an increase of 21.13 per cent compared with the same month in 2003 (Netcraft.com, 2004a). Another study also found the use of secure layer protocol grew by 56.7 per cent in the 12 months between April 2003 and April 2004 (Netcraft.com, 2004b).
At the end of 2003, developing countries accounted for more than 36 per cent of all Internet users in the world, and their share in the Internet population of the world grew by nearly 50 per cent between 2000 and 2003 (International Telecommunications Union, 2004). However, the depth of Internet penetration in developing countries is far more limited than in industrialized countries. For instance, the penetration ratios of developing countries are ten times lower than the average of the developed world (United Nations, 2004). Although many companies in developing countries are starting to use the Internet for various business functions, they are not yet engaged in on- line transactions (United Nations, 2004). This information needs to be captured by analyzing the adoption of information and communication technology (ICT) by businesses. Currently, there is no international database that provides information on the use of ICTs in enterprises in developing countries (United Nations, 2004).
The Internet has and will continue to have a great influence on consumers. How we go about purchasing products has been affected dramatically by the Internet, which in turn, will have an
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influence on marketing strategies in businesses. The ability to analyze and understand consumer behaviour on the Internet will therefore be crucial for businesses.
Rifkin (1995) spoke about the global economic and social changes that will likely occur as continued technological advancements (especially in the field of computer science) reduce the number of workers needed to produce the goods and services needed by the global populatio n.
The technological advancement has significantly influenced the style of human-computer interaction, especially for World Wide Web. In the area of education, Educators have developed many special classroom activities and collaborative projects based on the use of the World Wide Web (Owston, 1997).
The growth of Internet usage, spurred by rapidly advancing network technologies, has been bringing about broad changes in customer behaviours related to the Internet, attitudes toward the traditional mass media, and satisfaction. Internet users with a high-speed Internet service system tend to enjoy various kinds of services, including e- mail, and depend less on the traditional media, such as TV and radio, for information and entertainment. They also have an increased level of satisfaction in the dimension of convenience (Cho, et al 2003).
Instant messaging is perceived as offering many advantages over e- mail including conveying emotions, building relationships and ease of use. Users are more likely to use symbols with their instant messages to help communicate (Lancaster, et al 2007).
According to Servais et al., (2006), E-business is an important business tool, and the increasing presence on the Internet reflects this fact. For small- and medium-sized firms (SMEs) interested in internationalizing, their Internet offers some advantages, because, with e-business, borders between countries are becoming less relevant, and more direct interaction between business ent ities is made possible. Servais et al., (2006) continue that, born global firms use the Internet to convey their market presence, but only to a limited extent do they sell their products via the Internet. Instead, they use the Internet to support the already existing relationships by describing their product s on web pages, offering services related to their products via the Internet, facilitating product development via the Internet, and building and maintaining relations to foreign customers.
Mathur et al., (1998) suggests that providing services on the Internet should be an important component of a service firm‘s marketing strategy. The Internet has become a medium for commerce, marketing, advertising and distribution, as well as inventio n, entertainment and discussion (McKnight, 2001).
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alleviate the political alienation, many governments have implemented cyber government which usually refers to web pages of a government that are used for allowing citizens to voice their feedback on public policy and participate in political processes (Gronlund, 2001). United Nations (2005) study below show the percentage of government sites offering on- line services among different global regions.
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Table 1: Country E-Government Readiness Index Rank
Source: (http://www.gaportal.org/report-un-report-ranks-e-gov-readiness-unpan-14-june-2010)
Global e-government readiness index comparison of sub-Saharan Africa results shown in Table 1 above suggested that North America (including the USA, Canada and Mexico) were offering the highest percentage of on-line services. About 62 per cent had fully executable on-line services. This was followed by Asia (36per cent), Western Europe (34 per cent), and the Middle East (29 per cent), and Pacific Ocean Islands (28 per cent). Only 22 per cent in Central America, 10 per cent in Russia, and 9 percent in Africa offer on- line government services. Africa, like in other similar studies, trailed counterparts in the rest of the world.
• e-Government readiness index
Country.
• (0.9062) 1
USA
• (0.9058) 2
Denmark
• 0.8983 3
Sweden
• (0.8777) 4
UK
• 0.8727 5
South Korea
• (0.8503) 6
Singapore
• 0.7347 7
Estonia
• 0.7012 8
Malta
• 0.69
Chile
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1.3 PROBLEM STATEMENT
Since 1993, when the Internet was made available for commercial use, its growth has outpaced every other technical communication advance in human history. It is now widely recognized that no
communications medium, or electronic technology, has ever grown as quickly as the Internet. Although prior to the Internet, technological advances have influenced commercial transactions, the revolution that is currently taking place is transforming the entire market place (Shaw et al., 1997). Statistics vary as to the total number of on- line users. The total on- line population worldwide was estimated to be around 150 million people in March 1999. One quarter of Western Europeans now have access to the Internet and five percent of those have made on- line purchases (NUALtd, 2000). In the UK alone, 12.5 million or 27% of the population have used the Internet in September 1999, and of those users, 27% have purchased goods on- line whereas 49% have used the Web to compare the price of goods and services (Commerce Net, 1999).
According to CommerceNet (1999), consumers are now entering a new era in which the majority of value-adding activities in the economy will move into cyberspace by means of globally connected electronic networks.
Despite an increasing number of on- line users and products that are being offered on the Web, there is relatively little work that focuses specifically on Customer motivation and buying behaviours on the Internet in Ghana. Similar to any other innovation, companies that decide to use the Internet for marketing their offerings will need to meet or exceed the expectations of their customers if they are to succeed. The purpose is to understand the current attitudes of on- line shoppers that will allow
marketing managers to segment and target the ―Internet market‖ more effectively.
Regardless of the trend towards technology adoption discussed in the paragraphs above, there has been a lot of skepticism however, surrounding the use of the Internet in Ghana. Some of this skepticism can be underlined by the following observations:
Research results show that in spite of the benefits of the Internet, its use among faculties in Africa is still very low. Adika (2003) noted that among the reasons for low patronage are;
low level of education lack of ICT advancement
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Poor financial transmission mechanism i.e. credit card usage Unwired lifestyle
In West Africa including Ghana, e-commerce is still in its embroidery stage compared to our
counterparts in southern Africa and Europe. In a particular survey, the result was that most companies use the e- mail facility (87%) while 60% use the Internet for information retrieval purposes. Only 34% use it for promotional activities in Ghana (Olav Jull Sørensen, Seth Buatsi, 2002).
Table 2: Ghana Internet Usage and Population Growth
Source: http://www.africanews.com/site/Internet_use_in_Ghana_low/list_messages/20662
From the Table 2above, even though the growth from year 2000 to 2009 has been very significant, o nly 4.2 per cent of Ghana's population uses the Internet in their daily lives in spite of the proliferation of Internet cafes across the country. This forms only 2% of Internet users in Africa and 0.06 per cent of the world‘s Internet user population. At the end of 2003, developing countries accounted for more than 36 per cent of all Internet users in the world, and their share in the Internet population of the world grew by nearly 50 per cent between 2000 and 2003 (International Telecommunications Union, 2004). However, the depth of Internet penetration in developing countries is far more limited than in
industrialized countries. For instance, the penetration ratios of developing countries are ten times lower than the average of the developed world (United Nations, 2004).Although many companies in
developing countries are starting to use the Internet for various business functions, they are not yet engaged in on- line transactions (United Nations, 2004). Against the background of the enormous
Year
2000 2006 2008 2009Users
30,000 401,300 880,000 997,000Population
18,881,600 21,801,662 23,382,848 23,887,812%Pen
0.2% 1.8% 3,8% 4.2%Usage
Source
ITU ITU ITU ITU16 | P a g e
first country in sub-Saharan Africa to have ―full Internet connectivity‖ in 1995; it has still been one country in the West African sub-region, to achieve the most developed IT sector (African Business Magazine, 2005). The researchers find it opportune to investigate into the factors that help to explain customer buying behaviour and the use of the Internet in Ghana in general.
1.4 PURPOSE OF THE STUDY
The purpose of the study is to establish what the motivation is and what the buying behaviours are for Internet users in Ghana.
In this regard, we will investigate those factors that motivate customers to use the Internet as a one stop shop. We will also explore the factors that deter customers from doing on- line business.
1.5 JUSTIFICATION OF THE STUDY
Research in this subject area for Ghana is minimal if not non-existent. Therefore the output of this study will contribute to knowledge and literature in the subject area under investigation. This study will explore fear and skepticism surrounding the Internet and provide insights that may assist them in expanding their offering with the help of technology. It will also explore how users would derive maximum benefit from the use of the e-commerce. The findings of the research will be outlined as on- line retail consumer behaviour to enhance consumer knowledge and on- line marketing strategy effectiveness.
The study would further investigate the inhibiting factors for Internet adoptio n by small to medium-sized enterprises (SMEs) in Ghana and advice on the fundamental steps that can facilitate Internet usage.
1.6 RESEARCH OBJECTIVES
The study has the two main objectives, primary and secondary objectives. 1.6.1 PRIMARY OBJECTIVES
To identify factors that motivates customers to use the Internet. This will look at some of the reasons why customers will use or not use the Internet as a marketing platform.
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To explore and analyze the ways in which the Internet affects buying behaviour in Ghana compared to in other countries. In simple terms we will find out if customers will prefer on- line purchases because of ―time starvation‖ for example.
To find out customer ‘s perception of the Internet environment in Ghana and what clients believe could improve usage.
1.6.2 SECONDARY OBJECTIVES
To provide a guideline for small to medium-sized enterprises (SMEs) (i.e. businesses employing less than 200 people) who are more likely to become adopters of enterprise systems (ES). The guideline will explore other areas that can be used to assist software vendors, not only to
develop marketing strategies that can target potential adopters, but also to develop strategies to increase the adoption of ES among SMEs.
1.7 RESEARCH QUESTION
The following research questions were identified: What factors influence Internet usage in Ghana? Does Ghanaian have easy access to computers?
What factors have hindered the effective usage of the Internet platform by individuals and corporate bodies in Ghana?
What has Internet service providers done in support of Internet usage and acceptance in Ghana? 1.8 DEFINITION OF KEY CONCEPT
1.8.1 CUSTOMER
A customer (also known as a client, buyer, or purchaser) is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services. However, in certain contexts, the term customer also includes by extension any entity that uses or experiences the services of another. A customer may also be a viewer of the product or service that is being sold despite deciding not to buy them.
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particular shop, who made it a habit to purchase goods of the sort the shop sold there rather than elsewhere, and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future (Shuman et al., 2002).
The topic referred to customer instead of student in capturing the topic for this research for the following reasons:
a. Other groups or stakeholders in the University were interviewed in finding out the outcome of the project and the researchers deemed it fit to refer to all these groups collectively as customers instead of using student which will mean only students took part in the project.
b. All users of the internet pay for the services it offers and could therefore be referred to as customers.
c. Last but not least, all persons who use the internet need to subscribe to the service providers to have access and therefore can be classified as customers.
1.8.2 BUYING BEHAVIOUR
Buying behaviour comprises the mental and physical activities (behavio ur patterns) of decision units (individual, families and organizations) which precede, determine, and follow on the decision process for the acquisition of need- satisfying products, ideas and services (Du Plessis and Rousseau, 2003). 1.8.3 MOTIVATION
Motivation is the dominant thought of the moment. You cannot motivate anyone; you can only create a situation to which individuals will respond because they choose to. The ingredients of motivation are within each. When we are awake the motor is running and our motivation for action is responsive to three signals, neutral, forward or reverse. With stimulus, both internal and external, everything is believed to be possible (Gordon P. Rabey, 2004).
1.8.4 INTERNET
The Internet is a global system of interconnected computer networks that use the standard Internet Protocol Suite (TCP/IP) to serve billions of users worldwide. It is a network of networks that consists of millions of private, public, academic, business, and government networks, of local to global scope,
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that are linked by a broad array of electronic and optical networking technologies. The Internet is the basis for the World Wide Web,
The roots of today's Internet date back to October 1969, when the US Defence Department's ARPAnet first came online. While this was not the first long-range computer network, it was the first to use packet-switching methods to ensure data integrity, optimized bandwidth utilization, and reliability. This was in stark contrast to the more common circuit-switching methods that demanded a fixed, dedicated path between two communicating computers. However, the TCP/IP protocol was not implemented until January 1983, when the United States' National Science Foundation established their university
network. With the introduction of domain names in 1985 and Tim Berners-Lee's invention of the World Wide Web in 1991, the Internet gained public interest. The World Wide Web made possible the
publication of documents that could be accessed (and inter- linked) in a simple manner with no need for opening an account on each machine accessed (Leiner, et al, 1998).
1.8.5 ELECTRONIC COMMERCE (E-COMMERCE)
E-commerce has been defined in a variety of ways by researchers. Schneider and Perry (2000) define e-commerce as business activities conducted using electronic data transmission via the Internet and worldwide web (WWW). According to Turban et al., (2002), e-commerce is the process of buying, selling, or exchanging products, services and information using computer networks including the Internet. Gibbs et a., (2003) define e-commerce as the use of the Internet to buy, sell, or support
products and services. In this study, e-commerce entails the use of the Internet for conducting business.
1.9 SUMMARY OF CHAPTER ONE
An overview of Ghana as well as the background of the study was discussed in this chapter. It laid bare the problem statement and the purpose of the study. It has justified why the study is necessary.
Definitions of key concepts of the study were also given. The next chapter is going to review the literature related to the study which will eventually help answer the research questions raised.
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CHAPTER TWO- LITERATURE REVIEW
2.0 INTRODUCTION
This chapter reviews literature of previous studies relating to the topic based on our research questions. Internet micro-environment and models of on- line buyer behaviours will be discussed. Paramount among the models is the Hierarchy of response model. The literature review will also discuss the Internet macro-environment using the SLEPT (Social, Legal, Economical, Political and Technological) framework (Oxford University Press 2007). It will finally touch on Culture and Technology adoption as well as IT adoption by organizations. The figure below shows the flow of the chapter.
Figure 3: Chapter disposition of the literature review
Literature Review
Internet Micro-environment
Internet Macro-environment
Culture and Technology adoption
IT adoption by organization
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2.1 LITERATURE REVIEW
The study will take critical look at the current position of what previous writers have said about
Internet usage in general as far as e-commerce (on-line buying) is concerned. It will also look at factors that motivate, and those that deliver effective service to Internet users. This chapter will look at studies related to the problem area and also specific literature reviews related to the research question (RQ). 2.1.1 THE INTERNET MICRO-ENVIRONMENT
The micro-environment is sometimes known as ‗the operating environment‘ and this refers to the immediate marketplace of an organization. Authors such as Porter (1980) on corporate strategy and Kotler et al. (2001) on marketing strategy make the distinction between micro-environment and macro-environment. The micro-environment looks at the marketplace, the organization itself and its
competitors. Understanding the organization‘s environment is a key part of situation analysis for the internet marketing strategy development process.
Michael Porter ‘s classic 1980 model of the five main competitive forces that impact a company still provides a pertinent framework for reviewing threats arising from the interplay between the different stakeholders of the micro-environment. The five competitive forces are:
Bargaining powe r of buyer- The power of online buyers has increased since they have a wider choice and prices that are likely to be forced down through increased customer knowledge and price transparency.
Bargaining powe r of suppliers-When an organization purchases, the bargaining power of its suppliers is reduced since there is a wider choice and increased options due to e-procurement and e- marketplaces.
Threat of substitute products and services- Substitution is a significant threat since new digital products or extended products can be readily introduced. These substitutes can involve the new online channel essentially replicating an existing service as in the case with online banking or e-books.
Barrie rs to entry- Barriers to entry are reduced, enabling new competitors, particularly for retailers or service organizations that have traditionally required a mobile sales force. New entrants must be monitored to avoid erosion of the market share. Internet services are easier to imitate than traditional services. Internet makes it easier for ‗fast followers.‘
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Rivalry between existing competitors- The internet encourages commoditization which makes it less easy to differentiate products. Rivalry becomes more intense as product lifecycles
decrease and lead times for new product development decrease. Again, the internet facilitates the move to the global market, increasing the number of competitors.
Organizations that monitor and respond appropriately to changes in the micro environment have the greatest opportunities to compete effectively in the competitive marketplace. Let us now consider the behavioral patterns of buyers.
2.1.2 MODELS OF ON-LINE BUYER BEHAVIOUR
Cotte, Chowdhury, Ratenshwar & Ricci, (2006), identified four distinct consumer gro ups with different intentions and motivations: Exploration, Entertainment, Shopping and Information. That is to say some go to the Internet just to explore, others to seek entertainment. The other two groups go onto the
Internet for shopping purposes while the last group uses it to seek information.
Lewis and Lewis (1997) also identified five different types of web users or modes of usage of the Internet which remain valid today:
Directed information-seekers. These users will be looking for product, market or leisure information such as details of their football club‘s fixtures. They are not typically planning to buy on- line.
Undirected information-seekers. These users are usually referred to as ‗surfers‘, who like to browse and change sites by following hyper-links. Members of this group tends to be novice users (but not exclusively so) and they may be more likely to click on banner advertisements. Directed buyers. These users are on- line to purchase specific products on- line. For such users,
brokers or cybermediaries that compare product features and prices will be important locations to visit.
Bargain hunters. These users (sometimes known as ‗compers‘) want to find offers available from sale promotions such as free samples or competitions. For example MyOffers site (www.myoffers.co.uk) is used by many brands to generate awareness and interest from consumers.
Entertainment seekers. These are users looking to interact with the web for enjoyment through entering contests such as quizzes, puzzles or interactive multi-player games.
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In a report on benchmarking the user experience of UK retail sites, e-consultancy (2004) identified three types of consumer behaviours. They are as follows:
Trackers. These users know exactly which product they wish to buy and use an on-line shopping site to track it down and check the price, availability, delivery time, delivery charges or after-sales support. That is, the tracker is looking for specific information about a particular product. The report continues that, if they get the answers they are seeking; they need little further persuasion or purchase justification before completing the purchase.
Hunters. These do not have a specific product in mind but knows what type of product they are looking for (e.g. digital camera, cooker) and probably has one or more product features they are looking for. The hunter uses an on- line shopping site to find a range of suitable products, compare them and decide which one to buy. The hunter needs more help, support and guidance to reach a purchasing decision.
Explorers. These users do not even have a particular type of product in mind. They may have a well-defined shopping objective (e.g. buying a present for someone), a less-resolved shopping objective or no shopping objective at all.
According to e-consultancy (2004), these do not equate to different people, since according to the type of product or occasion, the behaviour of an individual may differ. Indeed, as they research a product they are more likely to become more directed.
Kotler et al., (2001) gave an alternate view of consumer behaviour in a ‗hierarchy of response model‘ made up of the following stages: awareness, interest, evaluation, trail and adoption. This model
discusses the various stages in the e-business motivation and also comprehensively elaborates the ways to develop the e-business environment to motivate its adoption.
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Breitenbach and Van Doren (1998) also suggest that audience members of individual web sites tend to pass through these stages.
Figure 4 below is a diagrammatical study of the hierarchy of response model. It indicates how the Internet can be used to support the different stages in the buying process. The boxes on the left show the typical stages that a new prospect passes through as indicated by Robinson et al., (1967). A similar analysis was performed by Berthon et al., (1998), who speculated that the relative communications effectiveness of using a web site in this process gradually increased from 1 to 6 as shown below.
Figure 4: A summary of how the Internet can impact on the buying process for a new purchaser Source: (Berthon et al. 1998)
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It is worthwhile reviewing each of the stages in the buying process referred to in Figure 4in order to highlight how effective the Internet can be when used at different stages to support the marketing communications objectives. Of course, the exact stage of the buying decision varies for different products and different types of customers. The various stages are discussed below:
Cons umer is unaware. Company generates awareness (of need, product or service).
Generating awareness of need in conventionally achieved principally through the mass media used offline advertising. The Internet is relatively ineffective at this since it tends to have a more limited impact and reach than television, radio or print media. However, display advertising or paid search marketing can be used to supplement offline awareness-building. Some companies like Zopa have effectively developed brand awareness by means of personal relationship (PR) and media mentions concerning their success on the Internet, with the result that even if a customer does not have a current need for a product, that customer may be aware of the source when the need develops. Examples of e-business that have developed a well known brands include Amazon for books, Dell for computers and CDWOW for music just to mention a few.
Cons umer is aware of need. Company develops specification, position features, benefits and brand. Once a consumer is aware of a need and is considering what features and benefits he or she requires from a product, they may turn straight to the web to start identifying the range of features available from a particular type of product through using a generic search. O n- line, search engines such as Google, MSN and yahoo are important at this stage and effectively increase comparison at this early stage in the buying process. The prospect will likely also click through to destination sites to find out about, for example, features available in a digital
television or characteristics of a place to go on holiday. If a company is fortunate eno ugh to achieve interest at this point, then it has an early opportunity to enter a dialogue with a customer and build the product‘s brand and generate a lead.
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customers are actively searching for products (the directed information-seeker of Lewis and Lewis, 1997), the web provides an excellent medium to help them do this. It provides a good opportunity for companies to describe the benefits of their web sites and obtain qualified leads. The Internet marketer must consider the methods that a customer will choose for searching and then ensure the company or its product is featured prominently.
Cons umer evaluates and select. Supplier assists purchase decision by providing relevant information in a form that is easy to find and digest. A company can use its web to helping persuading the customer. For example, the Comet site (www.comet.co.uk) has shown in Figure 5below enables customers to readily compare product features side-by-side, so the customer can decide on the best product for them. Branding issues are important here as mentioned by De Chernatony (2001). A new buyer naturally prefers to buy from a familiar supplier with a good reputation. It will be difficult for a company to portray itself in this way if it has a slow, poorly designed or shoddy web site.
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Figure 5: Comet product comparison facilities
Source: www.comet.co.uk
Cons umer: purchase. Company should facilitate purchase. Once a customer has decided to purchase, the company will not want to lose the customer at this stage. The web site should enable standard credit –card payment mechanism with the options to place the order by phone or mail. On- line retailers pay great attention to identifying factors that that encourage customers
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delivery choices and free delivery offers, for example, can help increase conversion rates.
Post-purchase service, evaluation and feedback. Company should support product use and retain business. The Internet also provides great potential for retaining customers. Value-added services such as free customer support can be provided by the web site and these encourage repeat visits and provide value-added features; Feedback on products can be provided to customers; the provision of such information will indicate to customers that the company is looking to improve its service; E- mail can be used to give regular updates on products and promotions and encourage customers to revisit the site. Repeated visit to sites provides opportunities for cross-selling and repeat selling through personalized sales promotion messages based on previous purchase behaviour.
In Internet micro environment, watching competitor‘s use of Internet marketing for acquisition and retention of customers is very important at the customer search for supplier stage. This is because of the dynamic nature of the Internet medium. Porter (2001) pointed out this dynamism enables new services to be launched and elements of marketing mix such as price and promotion changed much more frequently than was traditionally the case. Copying of concepts and approaches may be possible, but can on some occasions be controlled through patenting. For example, Amazon.com has patented the ‗one click‘ approach to purchase, so this term is not found on other sites. The implication is that competitor benchmarking is not a one-off activity while developing a strategy.
‗Benchmarking‘ is the term used for structured comparison of e-commerce services within a market. Its purpose is to identify threats posed by changes to competitor offerings, but also to identify
opportunities for enhancing a company‘s own web services by looking at innovative approaches in non-competing companies. Companies need to review the Internet-based performance of both existing and new players. Companies should review:
Well-known local competitors;
Well-known international competitors;
New Internet companies local and worldwide (within the sector and out of sector)
Chase (1998) advocates that when benchmarking, companies should review competitors‘ sites, identify best practices, worst practices and ‗next practices‘. Next practice is where a company looks beyond its
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industry sector at what leading Internet companies such as Amazon (www.amazon.com) and Cisco (www.cicso.com) are doing. For instance in the financial services industry could look at what portal sites are providing and see if there are some lessons to be learnt on ways to make information provision easier. When scanning competitor sites, the key differences that should be watched out for are:
New approaches from existing companies; New companies starting on the Internet;
New technologies, designs techniques and customer support on the site which may give a competitor advantage.
Deise et al., (2000) suggest an equation that can be used in combination to assess the capability of competitors to respond:
Competitive capability=
‗Agility‘ refers to the speed at which a company is able to change strategic direction and respond to new customer demands. ‗Reach‘ is the ability to promote products and generate new business in new markets. ‗Time –to-market‘ is the product life cycle from the concept through to revenue generation. Companies with a high competitive capability within their market and competitive markets are arguably the most important to watch.
To assess the success of competitors in generating visitors to their web sites, a variety of data sources can be used. Example, panel data can be used to compare number and type of visitors to competitor sites through time. Summaries of ISP data such as Hitwise (www.hitwise.co.uk) can also be used to assess visitor ranking for different competitors. Another alternative is the audit of web site traffic such as that produced by ABCelectronic (www.abce.org) can be used for basic comparison of visitors. The use of intermediaries is also useful in Internet marketing. Marketing intermediaries are firms that can help a company to promote, sell and distribute its products or services. In the Internet context, on-line intermediaries can be contrasted with destination sites which are typically merchant sites owned by manufacturers or retailers which offer information and products (in reality any type of site can be a destination site, but the term is generally used to refer to merchant and brand sites). O n- line
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2.2 INTERNET MACRO-ENVIRONMENT
The macro-environment is the broader forces affecting organizations in the marketplace. These forces can influence the way in which Internet is used to support marketing. The macro-environment can best be explained using the widely used SLEPT (Social, Legal, Economical, Political and Technological) framework instead of the PEST (Political, Economical, Social and Technological) factors. This stresses the importance of law in influencing Internet marke ting practices.
2.2.1 SOCIAL FACTORS
These include the influence of consumer perceptions in determining usage of the Internet for different activities. Government may promote the use of e-commerce while social conventions may limit its popularity. An indication of how social perceptions shape access is clear from a UK government-sponsored survey (Booz Allen Hamilton, 2002) of perceptions in different countries. It noted that social barriers to adoption of the Internet included:
No perceived benefit Lack of trust
Security problems Lack of skills Cost
National statistics (2005) reports that, less than a third (32 percent) of adults in the UK had never used the Internet as of May 2005. Of those who had not used the Internet, 43 percent had no Internet
connection; and 33 percent felt they lacked knowledge or the confidence to use it. Over 55 percent of non-users in the survey chose the state ‗I have not really considered using the Internet before and I am not likely to in the future‘. This core group on non-Internet users represented 17 percent of all adults in the UK.
The social impact of the Internet has also concerned many commentators and they have commented on various aspects of the social influences. Davis et al., (1989) found perceived usefulness underpinned the intention to adopt. Similarly, Grandon and Pearson (2004) found perceived usefulness to be the most influential e-commerce adoption factors as seen by SME top managers. Managers must see an increase in their job performance stemming from e-commerce adoption. On-line trust is one of the key obstacles to vendors succeeding on the Internet medium. A lack of trust is likely to discourage on- line consumers from participating in e-commerce (Yu-Hui Chen, Stuart Barnes. 2007).
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Gefen et al., (2006) also have the view that, national culture has a role to play in e-commerce adoption by an organization. Organizational culture also influences e-commerce adoption (Gibbs et al., 2003). Buyer trust is needed to begin any purchasing relationship whether the exchange is to take place on-line or off- line. In the on- line environment, instilling trust is critical to the formation of a purchasing
relationship owing to the perception of increased risk on the part of the would-be consumer (Sarah Quinton, Sally Harridge-March. 2008).
On the issue of organizations adoption, Kojo Saffu, John H. Walker, Robert Hinson (2008) explains that, Perceived usefulness, compatibility, external pressure and organizational pressure were found to be statistically significant determinants of e-commerce adoption. They continue further that, ease of use was also influential in the e-commerce adoption decision of Ghanaian SMEs.
As to why individuals and students are not using it to the full, Gefen et al., (2003) explains that, trust and beliefs are major players in e-commerce adoption. In IT, trust directly and strongly affects perceptions about perceived usefulness (PU) of IT (Gefen et al., 2003). Trust affects people‘s perceptions about the value of their relationships with others (Fukuyama, 1995).
In other words, IT adoption depends on its perceived usefulness, which implies the individual‘s assessment of the ability of specific IT to increase his or her performance at some task or activity (Davis et al., 1989). It is the ―perceptions that the IT increases productivity of the overall process‖ (Gefen et al., 2005).
The threat of cyber crime and other information security breaches continues unabated and the financial toll is mounting (Power, 2002). Interactive ICT are seen as a means for facilitating anti-social criminal activities which undermine national security and law enforcement and thereby threaten the very social fabric of democratic capitalist societies (Loader, 2000).
Lindstrom, (2001) showed that, one of the main emerging characteristics of on- line users is the growing lack of patience. Lack of patience is especially prominent when a consumer engages in
product research, feature and price comparison. Majority of interviewed individuals stated that they are willing to wait only up to five seconds for a page to load. On- line consumers are time conscious and are often willing to gamble with their money rather than time as it is impossible to recover lost time, where a moderate financial loss can be compensated (Koiso-Kanttila, 2005). On- line pricing strategy may strongly affect consumers in a number of ways (Amir, Lobel & Ariely, 2005).
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Shun &Yunjie (2006) showed that there are product types, which are more likely to be sold on- line such as software, books, electronics and music. Reason for this is that when purchasing these types of products, one does not require personal inspection and most, if not all features, can be outlined in the product description and images.
Ease in choice contributes to a more active research process and more promine nt selective criteria (Bellman, Johnson, Lohse & Mandel, 2006). Failing to satisfy their expectations can reduce their interest in the product and direct their research toward better-priced product with similar or matching features. Raymond, (2003) showed that brands, which interrupted an intellectually engaging task, received an instant dislike. When buying products and services on- line, consumers are facing two fundamental differences: removal of physical presence and (as a compensation) abundance and versatility of product information (Kurnia & Schubert, 2006).
2.2.2 LEGAL AND ETHICAL FACTORS
These determine the method by which products can be promoted and sold on-line. Governments, on behalf of society seek to safeguard individual rights to privacy. Privacy refers to a moral right of individuals to avoid intrusion in to their personal affairs by third parties. Privacy of personal data such as identities, likes and dislikes is a major concern to consumers, particularly with the dramatic increase in identity theft. According to the Guardian (2003) quoting the credit Industry fraud avoidance system (CIFAS) and the UK‘s fraud prevention service, it is the fastest-growing crime which generates a crime cash flow of £10m a day. In 1999, there were 20,264 reported cases of identity theft in the UK; but by 2002, that figure had reached 74,766. This figure rose to 101,000 in 2003. Identity fraud involving credit and debit cards rose by 45 percent in 2003.
For marketers to better understand their customers‘ needs, this type of information is very valuable. Collecting such information helps in target communications and develops products that are more consistent with users‘ needs. How should marketers respond to this dilemma? An obvious step is to ensure that marketing activities are consistent with the latest data protection and privacy laws.
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The main information types used by the Internet marketer which are governed by ethics and legislation are:
Contact information. This is the name, postal address, e- mail address and for B2B companies, web site address.
Profile information. This is information about a customer‘s characteristics that can be used for segmentation. They include age, sex and social group for consumers, and company
characteristics and individual role for business customers. Ward et al. (2005) found that consumers are willing to give non- financial data if there is an appropriate incentive. Behavioural information (on a single site). This is purchase history, but also includes whole
buying process. Web analytics can be used to assess the web and the mail contents accessed by individuals.
Behavioural information (across multiple sites). This can potentially show how a user accesses multiple sites and responds to ads across sites.
The table below summarizes how these different types of customer information are collected through technology.
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Table 3: Types of information collected on-line and related technologies
Mason (1986) summarized ethical issues that are concerned with the personal information ownership into four areas:
Privacy- What information is held about the individual? Accuracy- Is it correct?
Property-Who owns it and how can ownership be transferred?
Accessibility-Who is allowed to access this information, and under which condition?
Fletcher (2001) provides an alternative perspective, raising these issues of concern for both the individual and the marketer:
Transparency- who is collecting what information?
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Liability- who is responsible if data is abused? Data protection legislation is enacted to protect the individual, to protect their privacy and to prevent misuse of their personal data. In the UK, the enactment of the European legislation is the Data protection Act 1984, 1998 (DPA), which is managed by the legal requirement of the 1998 UK data protection act and summarized at
www.informationcommissioner.gov.uk.
The guidelines on data protection principles are produced by information commissioner (1998) on which this overview is based. These principles state personal data should be fairly and lawfully processed.
The Information commissioner has produced a ‗fair processing code‘ which suggests how an
organization needs to achieve ‗fair and lawful processing‘. The Act requires that the following criteria are met:
Appointment of a data controller who is a person with defined responsibility for data protection within the company.
Clear details in communications such as on a web site or direct mail of how a ‗data subject‘ can contact the data controller or a representative.
Before data processing ‗the data subject has given his consent‘ or the processing must be necessary either for a ‗contract to which the data subject is a party‘. (For example as part of a sale of a product) or because it is required by laws. Consent is defined in the published
guidelines as ‗any freely give specific and informed indication of his wishes by which the data subject signifies his agreement to personal data relating to him being processed‘.
Sensitive personal data requires particular care, this includes: ◦ The racial or ethnic origin of the data subject.
◦ Political opinions.
◦ Religious beliefs or other beliefs of a similar nature. ◦ Membership of a trade union.
◦ Physical or mental health or condition. ◦ Sexual life.
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The data protection law requires that, information is processed for limited purposes. It states that: Personal data shall be obtained only for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes. This implies that the organization must make it clear why and how the data will be processed at the point of collection. The important issues are:
Whether future communications will be sent to the individual ( explicit consent is required for this in on-line channels; this is clarified by the related privacy and electronic communications regulation Act which is referred to below);
Whether the data will be passed on to third parties ( again explicit consent is required); How long the data will be kept.
Other e-comme rce legislation
Sparrow (2000) identified eight areas of law which need to concern on- line marketers. They are; marketing your e-commerce business, domain registration, forming an electronic contract (contract of law and distance-selling law), making and accepting payments, authenticating contracts concluded over the Internet, E- mails risks, prospecting intellectual property (IP) and advertising on the Internet. Let us take a look at each of the e-commerce legislations listed above.
Marketing your e-commerce business. Sparrow used this category to refer to purchasing a domain name for its web site. There are now other legal constraints that also fall under this category.
Domain registration. Domain name dispute can arise when an individual or company has registered a domain name which another company claims they have the right to. This is
sometimes referred to as ‗cybersquatting‘. Using competitor names and trademarks in meta-tags (for search engine optimization). Meta-tags are part of HTML code of a site that are used to market web sites by enabling them to appear more prominently in search engine optimization (SEO). Some companies have tried putting the name of a competitor company name within the meta-tags. This is not legal since case law has found against companies that have used this approach. Using offering of an ‗HP laptop? Competitor names and trademarks in pay-per click advertising. A similar approach can potentially be used in pay-per click. For example, if a search user types ‗Dell laptop‘ can an advertiser bid to place an ad vertisement?
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Accessibility law. Web accessibility refers to enabling all users of a web site to interact with it regardless of disabilities they may have or the web browser or platform they are using to access the site. Many countries now have specific accessibility legislation. This is often contained within disability and discrimination acts. In the UK, the relevant act is the disability and discrimination act 1995.
Forming an electronic contract. There are two aspects of forming an electronic contract. They are country of origin principle and distance-selling law:
Country of origin principle. The contract formed between a buyer and a seller on a web site will be subject to the laws of a particular country. This raises an issue of which law applies-Is it that of the buyer, for example located in Germany, or the seller
(merchant), whose site is based in France? Although this is unclear, in 2002 attempts were made by the European Union (EU) to adopt the ‗country of origin principle‘. This means that, the law for the contract will be that where the merchant is located.
Distance-selling law. Sparrow (2000) advises different forms of disclaimers to protect the retailer. For example if a retailer made an error with the price or the product details were in error, then the retailer is not bound to honour a contract, since it was only displaying the products as ‗an invitation to treat‘, not a fixed offer. A well known case was when an e-retailer offered televisions for GBP2.99 due to an error in pricing a GBP299.00 product. Numerous purchases were made, but the e-retailer claimed that a contract had not been established simply by accepting the on- line order. Although the customers did not see it that way, unfortunately, no legal precedent was established in this case since the case did not come to trial. Sparrow suggests that terms and conditions should be developed to refer to issues such as timing of delivery and damage of loss of goods.
Making and accepting payments. For transactional e-commerce sites, the relevant laws are those referring to liability between a credit card issuer, the merchant and the buyer. Merchants need to be aware of their liability for different situations such as the customer making a fraudulent transaction
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the identity of the purchaser. For example, to help prove a credit card owner is the valid owner, many sites now ask for a 3-digit authentication code which is separate from the credit card number. This helps reduce the risk of someone buying fraudulently with a credit ca rd number found from a traditional shopping purchase. Using digital signatures is another method of helping to prove the identity of purchasers (and merchants).
E-mails risks. One of the main risks with e- mail is infringing an individual‘s privacy. Specific laws have been developed in many countries to reduce the volume of unsolicited commercial e-mail spam. A further issue with e- e-mail is defamation. This is where someone makes a statement that is potentially damaging to an individual or a company. A well known example from 2000 involved a statement made on the Norwich Union Healthcare internal e- mail system in England which was defamatory toward a rival company, WPA. The statement falsely alleged that WPA was under investigation and that regulators had forced them to stop accepting new business. The posting was published on the internal e- mail system to various members of Norwich Union Healthcare staff. Even though it was in an internal system, it became widespread. WPA sued for libel and the case was settled in an out -of-court settlement when Norwich Union Healthcare paid GBP415, 000.00 to WPA.
Prospecting intellectual property (IP).Intellectual property rights (IPRs) protect designs, ideas and inventions and include contents and services developed for e-commerce sites. Closely related copyright law which is designed to protect authors, broadcasters and performers through ensuring they see some returns from their works every time they are experienced. The
European Directive of copyright (2001/29/EC) came into force in many countries in 2003. This is significant update to the law which covers new technologies and approaches such as
streaming a broadcast via the Internet. An organization‘s IP may be misappropriated and you need to protect against this. For example, copying a web contents and republishing on another site. Some organizations may misappropriate contents inadvertently. Some employees may infringe on copyright if they are not aware of the law. Hence some methods of designing transactional web sites have been patented. For example, Amazon has patented its ‗one-click‘ purchasing option.
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Adve rtising on the Internet. Advertising standards that are enforced by independent agencies such as the UK‘s Adverting Standards Authority Code also apply in the Internet environment (although they are traditionally less strongly policed, leading to more creative executions on-line.
2.2.3 ECONOMIC FACTORS
The variations in the economic performance in different countries and regions affect the e-commerce potential of each. Managers developing e-commerce strategies will target the countries that are most developed in the use of the technology. Knowledge of different economic conditions is also part of budgeting for revenue from different countries. For example, Fisher (2000) noted that the Asian market for e-commerce is predicted to triple within three years. However, within this market place there are large variations. Relative to income, the cost of personal computers (PC) is still high in many parts of Asia for people on low incomes. In China, there is regulation on foreign ownership of Internet portals and ISPs which could hamper development. According to Roussel (2000), economic, regulatory and cultural issues are among the factors affecting use of Internet for co mmercial transactions.
Globalization- This refers to the move towards international trading in a single global marketplace and the blurring of social and cultural differences between countries. Quelch and Klein (1996) point out some of the consequences for organizations that to compete in the global marketplace. They say a company must have:
A 24-hour order-taking and customer service response capability. Regulatory and customs-handling experience to ship internationally.
In-depth understanding of foreign marketing environments to assess the advantages of its own products and services.
Language and cultural understanding may also present a problem to a small or medium-sized company to posses the resources to develop a multi- language version of its site or employ staff with language skills. Quelch and Klein (1996) note that the growth of the Internet for business will accelerate the trend of English becoming the lingua franca of commerce. Hamill and Gregory (1997) highlight the strategic implications of e-commerce for B2B exchanges conducted internationally. They note that there will be increasing standardization of prices across borders as businesses become more aware of price differentials.
